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What's moving markets: correction or crisis? It depends where you sit.

"…rapidly declining markets, whilst always sobering, can also represent a signal to buy rather than sell and to remain calm while others panic."- Matthew Sherwood, Head of Investment Market Research, Perpetual
By · 23 Oct 2014
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23 Oct 2014
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“…rapidly declining markets, whilst always sobering, can also represent a signal to buy rather than sell and to remain calm while others panic.”- Matthew Sherwood, Head of Investment Market Research, Perpetual

Below summary of article written by Anthony O'Brien

Most commentators have blamed weakening global growth prospects and rising deflationary risks for the recent market correction.

Yet rates are at zero in 10 of the world's largest 13 economies. So why is growth so low?

The answer is very simple - there is too much debt in the world. Other than isolated cases (namely US banks and US households) no group has truly unwound its debt excesses since 2009 - most countries have wasted the past five years trying to spend their way out of debt. It is not surprising that the economy with the highest growth prospects in 2015 (the US) is the one which has done the most balance sheet repair.

Therefore the key question for investors is whether the recent market decline was an overdue correction, or something more fundamental that requires a change in investment strategy?

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